TRADE SECRET LITIGATION

CD: Reflecting on the last 12-18 months, could you provide an overview of trade secret litigation activity? What overarching trends and developments have you witnessed?

Froud: The number of cases involving employee competition, breaches of confidence and team moves has remained steady during this period. From this activity it is possible to discern a trend of judicial sympathy towards employers. The courts have regularly shown willingness – wherever possible – to protect businesses and to uphold reasonable restrictions contained within contracts of employment. Interestingly, the litigation has not been focused in one or two specific sectors. We have also seen indications that arbitration is becoming a more popular way of resolving commercial trade secrets disputes, especially where international parties and transactions are involved. This is driven in part by the fact that arbitration proceedings are generally – but not always – confidential and the relative ease of enforcing any award.

Gerardi: We have seen a steady increase in trade secret litigation and even more arbitrations given the recent changes to US patent laws, and given that the Defend Trade Secrets Act (DTSA) was recently signed into law, there will surely be even more activity going forward. The Supreme Court has ruled on several patent-related matters, such as Alice Corp vs. CLS Bank, Octane Fitness vs. Icon Health & Fitness and Limelight vs. Akamai, increasing the volume of patent litigation. Further, the America Invents Act, which was signed into law September 2011, provides for tougher patent review proceedings. These changes to patent law have made it more difficult to enforce patents. The value of intellectual property, however, continues to increase. We see more clients actively debating whether to try to protect their IP through patents, or whether they might better keep the information secret and protect it under trade secrets law. I believe the passage of the DTSA will reinforce the inclination to keep some IP as a trade secret. Clients’ desire for secrecy is also why we are seeing an increase in the number of private arbitrations, which can be kept out of the public eye, compared to litigation, which is in a public forum.